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The failure of new coke 1985

In 1985, the Coca-Cola Co. announced a decision that would rock the world. The old Coke formula would be taken off the market and replaced with a smoother, sweeter taste however the reaction of the American people was immediate and violent.

3.
Coca Cola
Think of a brand success
story, and you may well
think
of
Coca-Cola.
Indeed, with nearly 1 billion
Coca-Cola drinks sold every
single day, it is the world’s
most recognized brand.

4.
Coca Cola Market Position
• Coca Cola held no.1 marker position
for years
• Pepsi ‘the drink of youth’ was able to
strongly position its brand against the
old and classic image of its
competitor Coca Cola
• By 1983, Pepsi had begun to outsell
Coke in supermarkets.
• By 1983, Coca cola’s market share
had declined to from 60% to under
24%.

5.
As a result
In 1985, the Coca-Cola Co.
announced a decision that would
rock the world. The old Coke
formula would be taken off the
market and replaced with a
smoother, sweeter taste

6.
Research Diagram
Define the problem and
research objective
Develop the research plan
Collect the information
Analyze the information
Present the findings
Make the decision

7.
Defining the problem & Research Objectives
• Market analysts in the context of health- and weightconsciousness, believed that baby boomers were more
likely to purchase diet drinks. Therefore, any future
growth in the full- calorie segment had to come from
younger drinkers, who favored Pepsi and its
sweetness.
• Coke executives decided to develop a new formula
and called it the NEW COKE.

8.
Develop the Research Plan
• Coca Cola performed market research for two years and spent $4
million to check the market acceptance for the taste of the New Coke
• Moreover, to confirm whether or not they favored the Coke change
in concept
Descriptive
Research
• Surveys
Exploratory
Research
• Focus Groups
• Taste Tests (
200,000 blind taste
tests )

9.
Marketing Research Findings
• a Majority of the selected consumers sample, (about
53% versus 47%) liked the «new» Coke.
• This result was apparently instrumental in the
company’s decision to use this new formula and
replace the old one.

10.
After the official launch
The reaction of the American people was immediate and
violent, causing three months of unrelenting protest against
the loss of the original Coke.

11.
The Question is
Was the marketing research at fault?
The launch strategy?
Or did Coke "just not get it"?

12.
Marketing Research Failure
• Coca-Cola failed to conduct adequate research into the public perception of
the original brand, despite the taste tests, surveys, segmentation and Focus
groups carried out.
 Taste Testing:
• Taste testing results were subject to systematic biases.
• The majority of the tests had been carried out blind, and therefore taste was the
only factor under assessment and didn’t pay attention to the drink's packaging
for example
 Segmentation:
• In terms of segmentation, the research approached only consumers in Atlanta
skipping the rest of the states.

13.
Marketing Research Failure
 Surveys:
• The surveys consisted of simple closed-ended questions and was not likely to
reveal consumers’ deep feeling about Coke, wrong framing of questions yielded
wrong results which proved to be fatal.
 Focus Groups:
• Coke's only deviation from the standard sequence in market research was that
the quantitative survey of individuals appears to have been done before rather
than after the focus groups
• Coke generalized the focus group result, because as for US , focus groups
findings often vary from region to region.

14.
Marketing Research Failure
• The results of the focus-group phase and the survey conflicted. Although
both the focus groups and the survey had provided indications that there
would be consumer dissatisfaction, the survey results indicated that this
dissatisfaction would be limited to a small segment of the market; the focus
groups suggested the dissatisfaction would be widespread. The researchers
trusted the survey, which comprised a large number of interviews spread
over a wide, and presumably representative, area.
• Coca Cola’s marketing research also failed to consider consumer-buying
patterns. Therefore, in assessing consumer opinions, the company gave all
the responses equal weight despite the well known phenomenon, known as
the «80/20 rule» – that a small minority of purchasers usually account for
the vast majority of purchasers in a product category

15.
Conclusion
• The value of market research is capturing as complete a
picture as you can of your market BEFORE making a
decision.